The cost to produce each embroidery depends upon how you choose to setup your embroidery service.

For example:
* Do you work from home or are you renting commercial premises
* Do you lease the machine or did you buy it outright
* Do you employ staff or are you an owner operator
* Do you digitise your embroidery designs or outsource them

Running your business from home usually offers the lowest cost as compared to renting commercial premises. The down-side is that you don't get passing trade. You have to rely on paid advertising and word-of-mouth.

It's also worth bearing in mind that should you ever decide to sell your business a prospective buyer will quickly work out that your profits are higher than normal because you are not paying commercial rent or wages.

Embroidery costing in its simplest form

1. Take the total, monthly overhead costs of your business and divide that by the number of hours that you work per month. Now divide that amount by the number of logos you can embroider per hour. Note: That will of course change depending upon the number of stitches in each logo.
2. Thread, backing and design digitising costs are then divided by the number of logos in the order.
3. Add the above costs together and you have your cost for each embroidered logo.
4. There is one more VERY important add-on to arrive at your sell price. You have to add on your wage or profit.

As an example:
Let's say that you can embroider 12 logos per hour and you want to make a $30/hour profit. You will have to add $2.50 per logo to arrive at a sell price that covers your costs and gives you a profit/wage of $30 per hour.

How much do you think you are worth?

Now I'm not about to tell you how much profit you should or shouldn't make, but might I suggest that for $30 an hour you ought to consider working for someone else instead.

Running your own business does offer a certain amount of freedom and flexibility but working for someone else provides benefits like paid sick leave, paid holidays, superannuation and long service leave which you don't get working for yourself.

So if you are going to work for yourself - pay yourself enough to make self-employment really worthwhile.

Ask yourself this question

Would I be happy to work for someone else for the same pay I am getting now and working the same long hours every day? OK I understand that during the early days of a new business you might be working extra hard and making sacrifices to build the business but if you've been running for a couple of years and your still on $30 an hour then maybe some changes are needed.

Choose your customers wisely

Don't try to complete with the big boys and girls in the embroidery industry. They are using multi-head embroidery machines that can produce 8, 12, 15 or 20 embroideries in the same time that a single head machine can do just 1. Their costs per embroidery might very well be less than yours so if you match their prices you might end up working very long hours and for very little reward.

Give yourself a point of difference

Target the smaller orders – the ones that are almost a nuisance to the big companies. Become a specialist at embroidering products that others don't want to do.

Offer brilliant service and excellent quality at a fair price for your skills and service. You will make more money and you will also attract customers who value the service that you offer.

Don't chase the penny pinchers who want to drive your prices down to the ground. You won't be happy. You won't make profit and you know what? The penny pinchers probably won't be happy anyway – that's just how penny pinchers are.

Use an embroidery costing program

The quickest way to get an accurate cost and sell price for every new embroidery job is to use an embroidery costing program like EPACC. (Please contact us to enquire about program downloads).

EPACC runs on a Windows based computer that has Microsoft Excel installed on it. The cost depends upon how many embroidery machines you have in your shop.

How it works

You simply enter the overhead costs for your business. Costs like rent, machine lease cost, wages, electricity, printing, accounting Etc. You can enter them individually or as one lump sum. Once that's done you can forget about it until your costs change significantly.

EPACC uses that information calculates what it costs to run your business each minute of the working day. You also have to enter your costs for consumables like thread and backing fabrics too. EPACC works out the cost of thread and backing based upon the number of stitches in the logo and the size of the hoop.

For each new job, all you have to do is enter:

• Quantity required
• Stitch count of the design (or an estimate)
• Design digitising cost (if you outsource)
• Hoop size

EPACC instantly shows you:
* What it will cost to produce each logo,
* How long it will take to complete the job
* How much you should charge for it.

The charge per embroidery is calculated based upon the mark-up that you want to add on top of your costs. You can also set three different levels based upon the urgency of the order.
* Regular service - say 10 working days
* Express service - say 3 working days
* Rush service - Next working day